5/08/2009 @ 6:00AM

The Future Of Television

Lately, we’ve been having this conversation often: Have you noticed how CNN sticks in an ad every three minutes? Boy, TV is getting unwatchable, but for a reason: Old media is imploding at a fantastic pace right now. The cost of producing quality content is still high, especially the kind of content that CNN and a handful of others produce. Yet advertising dollars are scarce during this recession, with car companies going into bankruptcy and retailers struggling. Ad rates are dropping. Ad frequency is going up. And the poor consumers are squinting their eyes trying to extract the few droppings of real content out of the idiot box that is getting more idiotic by the day! Is this sustainable?

What is the future of television? I sat down recently with Mitch Berman, CEO of on-demand video service ZillionTV, and discussed exactly that.

Berman observes: “There is a critical ecosystem and convergence, if you will, of content providers, advertisers and ISPs that still needs to occur. Sitting above those three at the top of the ladder are consumers.” The very consumer whose needs are getting vastly ignored.

So what is the lay of the land, I asked Berman?

“We have Hulu, Joost and a total of 238 different Internet TV providers,” Berman says. “These are companies that call themselves Internet TV, although they do nothing with the TV itself. They are merely providing video access via a PC, and yes, there are millions of views of video over the Internet daily.”

“Then there are standard cable operators like Comcast and IPTV operators like AT&T U-Verse. There is DirectTV and Dish Network, who cannot do IPTV or deliver broadband based services via satellite, but they do provide video services. All of these ‘operators’ are competing for video subscriptions and against the free and open Internet TV companies that are springing up daily. It’s still TV versus PC. And, those are all just in this country. Satellite guys are beaming down video into the home but are limited by bandwidth. Telecoms have spent billions on deploying their IPTV services. Cable operators are trying to preserve their world of subscription against all these players by offering the ‘triple play’ of video, voice and high-speed Internet.”

The New York Times recently had an article on
AT&T
and
Verizon’s
IPTV launches, comparing their different approaches and what degree of success they are actually having. It’s a difficult world for them.

These operators are also competing against independent set-top box providers such as Roku and
Netflix
, the Blu-ray player,
TiVo
, Vudu, AppleTV and other devices. Consumers have to pay a fee of $99 and up just to get the box. AppleTV is $200 or more.

You have to buy these operators’ independent boxes and pay subscriptions to go “over the top” and download or progressively stream or do peer-to-peer file sharing in order to get the video into your home. This clogs the broadband pipe, which is causing significant consternation with the operators as Internet video grows in popularity and is using operators’ pipes to get to the consumer directly. The operators’ cost of building those broadband pipes was enormous, yet they are being bypassed.

“Consumers don’t care about all this, of course. They just want to watch their favorite video programs,” Berman adds. “I believe the company that understands the balance between consumers, advertisers, content providers and ISPs will win, if they create the right balance and business model.” That optimum cocktail remains elusive, although Berman’s company is attempting to crack the nut, focusing squarely on the TV screen and not the PC screen.

Berman asks good questions: “Do advertisers prefer the PC screen or the television screen? Do content providers prefer the PC screen or the television screen? If I am Oliver Stone, do I want people to watch my movie on a PC screen or on a television screen? I want to take a step back out of Silicon Valley and picture Indiana, Iowa and Oregon. When I come home from work, do I want to race right back to my PC?”

These questions have led Berman to frame his universe by assuming that the TV screen is the screen of choice, and the remote control is the input device. There is no computer screen or keyboard in the equation.

And this makes everything orders of magnitude more complex.

What Berman talks about is what you’ve heard me talk about for a while: personalization. We have not yet achieved any significant level of personalization on the PC, with the keyboard. The TV, with a much less capable input device, unfortunately, has a much, much bigger challenge ahead.

To be fair, Netflix is also trying to get to the TV. But to do so, the user has to still use the PC as the input device, selecting movies and rating them on the PC–a fragmented user experience.

Berman’s description of an ideal world of TV would be unlimited video-on-demand, perfectly personalized to the consumer taste, and with advertisers able to push ads precisely to align with that taste. Also, the delivery infrastructure will take into account the ISP’s interests, and the box will not be charged to the consumer.

Berman wants to change television. But ZillionTV is yet a vision, not even remotely close to a mass phenomenon. (Read “I Want To Change Television,” an interview with Mitch Berman.)

Meanwhile, as ZillionTV continues to work toward making the business model, the user experience and the conflicting interest groups align, the current consumer experience on television continues to slide.